PALO ALTO, USA: Escalating global population, changing lifestyles, and rapid industrialization has created a huge disparity in demand and supply of crude oil, causing its prices to overshoot the $120 a barrel mark. Natural sources of energy such as oil, coal, and natural gas are milked dry, forcing authorities to explore alternate energy sources.

New analysis from Frost & Sullivan, North American Solar Cell Manufacturing Equipment Markets, finds that the market earned revenues of $260.2 million in 2007 and estimates this to reach $1.2 billion in 2014.

Adverse climatic effects due to the emission of greenhouse gases have further catalyzed the shift to alternate sources such as solar, wind, nuclear, ethanol, and fuel cells. These energies have outscored natural energy resources by being cleaner, more economical, and easily replenished. Of all the alternative sources, solar energy remains the most feasible to develop on a remote property and flexible enough to meet changing requirements.

“There are clear cost advantages to installing solar panels compared to having transmission lines, particularly in areas that are not easily accessible,” states a Frost & Sullivan Research Analyst. “Moreover, solar cells are easier to manage and maintain than other sources such as wind or nuclear.”

Governments have also stepped in to avert the looming energy crisis in order to implement policies such as the Renewable Portfolio Standard (RPS), which mandates electricity retailers to draw a fraction of their power from renewable energy sources such as solar. Governments have supplemented these stringent laws with several tax incentives and tax breaks for solar power generation. All these moves encourage investments in solar power plants and solar cell manufacturing equipment.

Equipment vendors are working to improve efficiencies and increasing handling capacities, but their efforts offset solar energy’s high Cost/W-peak compared to competing natural energy sources. The shortage of raw materials increases the costs of production.

“Polysilicon prices are as high as $200 per kilogram since silicon, which forms the base substrate for most solar modules, is currently experiencing heavy shortage,” notes a Research Analyst with Frost & Sullivan. “The dearth of raw materials is preventing many manufacturing plants from operating at 100 percent capacity, driving up the prices of solar modules and hence, deterring potential investors.”

Cyclically, the dwindling end-user demand has compelled manufacturers to slow down production of solar modules and this, in turn, will likely result in the sluggish sales of new equipment.

Scientists and solar cell manufacturing equipment companies have been relentlessly striving to develop advanced technologies in thin film substrates that offer higher efficiencies. While the generation of 1W of power currently costs approximately $1.75 to $5, thin film substrates will help bring down the prices to a more acceptable $1.3/W by 2012. This technology’s lower requirement of silicon and substantial energy savings will likely give a boost to new equipment sales.

The North American new equipment sales reflect the popularity of thin film technology over traditional crystalline silicon. With increasing efficiencies and new technologies in the developmental stage, the potential for solar energy appears bullish.